Rules for the implementation of Article 6 of the Paris Agreement are still under negotiation at the international level, with a key focus on reaching consensus at COP26 in Glasgow. This report aims to inform this policy making process. It explores three key unresolved issues that are closely interrelated and that have potential to impact the global net emission reductions achieved through Article 6 as well as the amount of revenues generated to help meet the adaptation needs of particularly vulnerable developing countries. Summary: The report explores the potential quantitative implications of...

In order to reach the goals of the Paris Agreement, it is essential to rapidly move from a zero-sum offsetting approach towards rapid transitions to decarbonise all emitting sectors. Though originally developed for offsetting, using aspects of carbon market mechanisms to deliver results-based finance can have an important role in climate change mitigation and climate finance mobilisation goals. Such finance can either go towards helping host countries achieve their NDCs or in order to create an overall climate benefit. Various aspects and infrastructure built for carbon markets can be used as...

This report assesses options for the effective implementation of sustainable development impact assessment, in the context of climate change mitigation mechanisms such as those of Article 6 of the Paris Agreement. To ensure that these mechanisms contribute to sustainable development in the host country, it is necessary to measure this effect. The results of the project show how and which indicators at project level can be used in a targeted manner for monitoring, reporting and verification (MRV). In this way, tools are made available to decision-makers and project developers in voluntary and...

This report analyses how the role of sustainable development can be strengthened in the process of further designing the mechanisms under Article 6 of the Paris Agreement. The paper reflects on the experience with sustainable development in past and current market mechanisms and describes to what extent countries agreed on sustainable development issues in multilateral instruments and institutions outside the UNFCCC. Based on the current negotiating draft texts (SBSTA 50 from June 2019, as well as CMA2 from December 2019), recommendations are put forward on how to anchor sustainable...

The major aim of this research project was to provide insights on the state of current carbon market activities and options for supporting the continuation of new and existing mitigation activities in the pre-2020 period. This report contains a summary of the findings and combined conclusions from all analysis components addressed within the project. Main findings: In an analysis of CDM project vulnerability for major project types in key countries, we assessed the risk that projects would cease continuation of their GHG abatement without significant CER revenues. In this context, we conducted...

The new context of the Paris Agreement - particularly the universal commitment to regularly make increasingly ambitious contributions towards the global effort - present new challenges for carbon market stakeholders, especially for host countries. This guide proposes a number of considerations which countries hosting emission reduction activities should take into account when engaging in carbon markets under the Paris Agreement. It looks especially at how carbon market engagement relates to other aspects of national climate policy making and the fulfilment of commitments under the Paris regime...

Colombia faces a number of challenges including growing need for social housing in metropolitan areas driven by accelerating urbanisation associated with a growing electricity demand as well as increasing hydroelectric uncertainty as a result of changes in the el Niño weather phenomenon. At the same time, Colombia actively implementing its NDC under the Paris Agreement. These include measures to improve energy efficiency in the residential sector overall. Policies for renewable electricity, building codes, and appliance energy performance standards all play a role in these efforts. However...

The transition of CERs issued under the CDM for use by Parties towards their NDCs is a key outstanding issue for Article 6 negotiations at the UNFCCC. To inform the ongoing negotiations, we set out estimates of the potential CER supply by two groups of modelling teams, from research institutes in Japan and Germany. This paper presents an updated analysis of the potential supply of CERs issued for emission reductions occurring in the second commitment period of the Kyoto Protocol between 1 January 2013 and 31 December 2020 based on a selection of possible restrictions for their transition. Main...

The end of 2020 marks a fundamental change in the global governance of greenhouse gas emissions with the shift from the Kyoto Protocol era to that of the Paris Agreement. This has important implications for the future role and the feasible models of the voluntary carbon market. In this report – commissioned by the German Emission Trading Authority (DEHSt) at the Federal Environment Agency (UBA) – we analyse a number of options and offer key recommendations on the future role for voluntary carbon markets after 2020. Main findings: A critical focus of our analysis is whether and how “double...

This final report covers the results from a research project led by Öko-Institut and jointly conducted with other international experts such as from the Stockholm Environment Institute. The project was initiated against the background that policy-makers at the International Civil Aviation Organization (ICAO) are considering the detailed rules of a scheme to address carbon dioxide emissions from international aviation: the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Main findings: This research project analyses matters that are critical for implementing CORSIA...

This report analyses the momentum of targets for net-zero emissions across companies, cities and regions worldwide. We seek to unravel the ambiguity of net-zero targets to better enable the identification of truly ambitious actors and enhance support towards them. We offer recommendations for increasing target transparency with the aim of achieving greater accountability and ambition. Main Findings: 1. Net zero momentum is accelerating: The number of net-zero pledges from cities regions and companies has roughly doubled in less than a year since late 2019 As of October 2020, actors with net...

A growing number of subnational and corporate actors set net-zero emissions targets. These include some of the world’s largest companies, and hundreds of cities and regions around the world. This paper provides a summary of the momentum of target setting among these subnational and corporate actors. Main Findings: The shift towards net-zero greenhouse gas emission pathways is accelerating. An increasing number of subnational and corporate actors are setting net-zero emission targets. These encompass: 823 cities and 101 regions, which represent more than 828 million people across every...

A growing number of countries and companies are setting climate neutrality and net-zero targets. Many countries’ and companies’ efforts towards climate neutrality play a positive role contributing to the fight against climate change and reducing global emissions. However, some of these commitments only obscure the actual impact and ambition of actual climate efforts. In order to enable citizens, investors, consumers and other stakeholders to make an informed judgement, it is crucial that countries and companies are transparent about what exactly their target covers and how they intend to reach...

This discussion paper assesses options for improving the current Emissions Unit Eligibility Criteria (EUCs) used for the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) adopted by the International Civil Aviation Organization (ICAO), with the goal of ensuring the scheme’s environmental integrity. Clearly articulated EUCs are needed to define minimum standards for the “quality” of carbon offset credits that may be used under CORSIA. For this analysis, we focus on five EUCs that are essential for offset credit quality: additionality; baselines; permanence; avoidance of...

Article 6 of the Paris Agreement provides the framework for a new generation of carbon markets in a context where all countries are supposed to formulate and implement ambitious Nationally Determined Contributions towards a temperature target and ratchet their contribution on a regular basis. With the final rules for Article 6 being an issue of ongoing negotiation, virtual pilots can help contribute to the discussion regarding rulemaking for Article 6 and inform new ways to cooperate. NewClimate Institute has identified the installation of ground source heat pumps in Mongolia as a promising...

Article 6 of the Paris Agreement provides the framework for a new generation of carbon markets in a context where all countries are supposed to formulate and implement ambitious Nationally Determined Contributions towards a temperature target and ratchet their contribution on a regular basis. With the final rules for Article 6 being an issue of ongoing negotiation, virtual pilots can help contribute to the discussion regarding rulemaking for Article 6 and inform new ways to cooperate. NewClimate Institute has identified the construction of Net-Zero Energy Buildings in Colombia as a promising...

This paper assesses whether and how national and multinational credit purchase facilities have supported Clean Development Mechanism (CDM) projects that are vulnerable to the risk of discontinuing GHG abatement. Improving the understanding of the impact that the credit purchase facilities have had in supporting the continuation of emission reductions for vulnerable CDM projects can inform the available options for their further support. Key findings: Although the maximum potential CER supply from existing CDM projects in the 2013–2020 period is 4.65 billion CERs, we estimated that the...

A growing number of countries have started to set longer-term climate targets and develop decarbonisation strategies in addition to their shorter-term commitments under the Paris Agreement. Depending on the country, offsets in the form of emission reductions or emission removals from abroad play various roles in how countries sketch out future planning. In the context of constantly ratcheted up ambition of national climate efforts under the Paris Agreement however, the role that such offsets can play requires a shift from the current practice of offsetting continued emissions trends to rapidly...

The International Civil Aviation Organisation is in the process of finalising the design of a scheme – the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) – to address carbon dioxide emissions from international aviation. In this discussion paper we estimate the potential supply of carbon offset credits to meet demand from international aviation under CORSIA under a number of different scenarios which include different types of restrictions imposed on the eligibility of offset credits. Our analysis considers supply from the four largest offsetting programmes: the...